The archived blog of the Project On Government Oversight (POGO).

Jan 20, 2011

Unposted Inspector General Reports Showcase SEC Misconduct

By Michael Smallberg

A few months ago, we questioned why many of the investigative reports issued by the Securities and Exchange Commission (SEC) Office of Inspector General (OIG) are nowhere to be found on the agency or the OIG’s website.

Since then, we’ve obtained many of these unposted reports, which were released to POGO and others through the Freedom of Information Act (FOIA), but are still not available on the websites of the SEC or OIG. We’ve made these reports searchable and posted them on our own website as a resource to the public.

The OIG’s recent investigations have uncovered a number of alarming problems at the SEC, the agency tasked with protecting investors and ensuring the integrity of financial markets. As the SEC works to restore its reputation in the aftermath of the financial crisis, the OIG’s investigative reports offer a unique glimpse at the ongoing problems facing the agency.

Anyone who follows the SEC is probably well acquainted with the OIG’s blockbuster investigations of the agency’s failures to crack down on the Ponzi schemes orchestrated by Bernie Madoff and Allen Stanford. These two reports, which were the focus of significant media and congressional attention, were promptly posted on the SEC and OIG’s websites.

Unfortunately, in contrast to the OIG’s audit reports, it can take months or even years for investigative reports to be made available to public, if they’re made available at all. Even when they are released, they tend to be heavily redacted.

So perhaps it’s no coincidence that the SEC often ignores or rejects recommendations made in the OIG’s investigative reports, a problem we highlighted a few years ago in a letter to SEC Chair Mary Schapiro. This is especially a problem in cases where the OIG recommends disciplinary action. In a letter sent to Chairman Schapiro a few weeks ago, House Oversight and Government Reform Chairman Darrell Issa (R-CA) raised concerns about the systemic lack of discipline for SEC employees, citing many of the unposted investigative reports obtained by POGO.

We’re not suggesting that the SEC should be proactively redacting and posting every single investigate report issued by the OIG. Such a policy would likely place a substantial burden on agency and OIG staff since most investigative reports need to be heavily redacted prior to public release. And we’re not sure there’s sufficient public interest in releasing every investigative report, especially those that do not find any evidence of wrongdoing by the agency.

On the other hand, once an agency has already taken the time to redact and release a report in response to a FOIA request, it shouldn’t be too much extra work to post the report online. Even if the OIG doesn’t find any wrongdoing, posting the report online would allow the public to examine whether the OIG conducted a thorough investigation. For instance, the previous SEC IG came under heavy criticism for failing to conduct a serious investigation into allegations of whistleblower retaliation against Gary Aguirre.

We're still wading through the unposted reports, but we’ll be sure to describe any highlights (or lowlights?) as we come across them. For now, you can check out the reports here.

And if any of our loyal blog readers have obtained other OIG investigative reports that aren’t posted on our site, please drop us a comment below.

Comments

To Joe and Mark above - yep, it's a sad state of affairs. No one out there wants to touch this issue of lack of oversight of the SEC by congress, NO ONE! I have brought this issue up a number of times on internet posting and not only do these concerns get ignored by the authors of financial articles, but most often ridiculed! This all is a very elaborate hoax being played upon working americans and as diabolic as it is, and as much as I hate to compliment the devil's dirty deeds I do have to give the devil his due! These guys have been very clever in trapping all the abettors of this atrocity being played upon the american public and entangling a vast myriad of players in its deadly web. And what is even more frustrating is the look in the eyes of americans when one tries to warn of these misdeeds....I throw up my hands.....and Brian above, yep I believe you are correct-we are talking about survival of civilization here!

My name is Mark J. Novitsky and tragically I'm a long-term SEC / National Security whistleblower...since the Chris Cox days. And with Schapiro and Khuzami I knew corruption would remain the status quo...but didn't imagine things could get worse! My Congressman Keith Ellison is on the House Financial services Commission and knows FULL WELL about the deceit and criminal complicity...he is even involved as knowing of a felony and failing to take action is in itself a crime...Has refused to sign a pledge to fully and independently investigate financial crimes...even when committed by regulators! -

nothing has changed. this week obama came out for less
regulation want to bet he is going to start here? he has to
get the cash flowing back to the dnc and this is how you make it happen! people will continue to be threatened and put
in jail while goldman sachs continues its rule of planet earth
with people in the treasury of most countries governments.
we are talking about the survival of the planet not just
the rich getting richer!